Fiscal aims and austerity: different political parties' plans compared

22 December 2014

The Institute for Fiscal Studies (IFS) has published the first of its election briefing notes, funded by the Foundation, and analysing the three main parties’ proposed fiscal stances.

The IFS outlines how the existence of the independent Office for Budget Responsibility has greatly increased the transparency of the UK’s official economic and public finance forecasts and increased confidence that these are not based on politically-motivated wishful thinking. Consequently, it is harder for politicians to borrow inappropriately for short-term gain and the benefits of fiscal rules and targets have been reduced. Such rules are, however, still useful as a statement of a government’s fiscal objectives and as a way of holding it to account if it deviates.

The briefing note explains that the current government and each of the three main parties have all set out more-or-less specific targets for borrowing in the next parliament. All but the Conservatives have also said explicitly that they want debt to be falling as a share of national income by the end of the next parliament (or earlier). However, the debt targets look unlikely to be constraining if the borrowing targets are met.